Hedge fund investors redeem USD2.2bn in October

“The outflow in October was only the second for hedge funds this year,” says Sol Waksman, president and founder of BarclayHedge. “Hedge funds have taken in USD49.4bn so far in 2013, a sharp reversal from the outflow of USD12.9bn outflow in the same period last year.

“Industry assets stood at a five-year high of USD2.0trn, according to estimates based on data from 3,348 funds. Assets are up 15.3 per cent in 2013 but are down 16.1 per cent from the all-time peak of USD2.4trn in June 2008.”

The monthly TrimTabs/BarclayHedge Hedge Fund Flow Report reported that the industry gained 1.7 per cent in October, underperforming the S&P 500, which gained 4.6 per cent. Equity long only hedge funds gained 1.9 per cent in October, down from 5.9 per cent in September. Equity long bias funds, meanwhile, gained 2.3 per cent in October, down from a 3.1 per cent gain in September.

Funds of hedge funds shed USD1.2bn (0.2 per cent of assets) in October, adding to a USD2.6bn outflow in September.

“Outflows from funds of funds have been relentless,” says Waksman. “Investors pulled money out of them in 22 of the past 24 months."

Meanwhile, the monthly TrimTabs/BarclayHedge Survey of Hedge Fund Managers finds that only 18.3 per cent of hedge fund managers were bearish on the S&P 500 in November, the lowest level this year. Two-thirds of survey respondents expect equities to outperform bonds and precious metals over the next six months. A similar proportion expects developed markets to outpace emerging and frontier markets in the same period.